MBA 601 Test 1- part 1 Latest Update 2025-2026
50 Questions and 100% Verified Correct Answers
Guaranteed A+
A company must pay out the profits that it earns to the stockholders. - CORRECT
ANSWER: False
A corporation is its own separate legal entity. - CORRECT ANSWER: true
A share of stock entitles you to: - CORRECT ANSWER: A percentage of the earnings of
the company
An ordinary dividend is - CORRECT ANSWER: A distribution of earnings to the
shareholders
Assuming a 6% discount rate which choice is better:
Choice A: Get $500 today
Choice B: Receive $600 in 2 years
Choice C: Recieve $300 today, $200 in 2 years, $60 in 3 years - CORRECT ANSWER:
B
Assuming a discount rate of 4% choice is better:
Choice A: $500 today
Choice B: $540 1 year from now. - CORRECT ANSWER: B
Assuming a discount rate of 9% choice is better:
Choice A: $500 today
Choice B: $540 1 year from now. - CORRECT ANSWER: A
, Benefits (i.e. money) that a company receives from its customers is called - CORRECT
ANSWER: Revenue
Companies raise money by issuing stocks and bonds on the - CORRECT ANSWER:
primary market
Companies that are growing quickly usually issue dividends - CORRECT ANSWER:
False
How will lowering the discount rate affect the present value of a perpetuity? - CORRECT
ANSWER: increase present value
How will lowering the discount rate affect the present value of an annuity? - CORRECT
ANSWER: increase present value
If a corporation had earnings of $40,000 and paid all of this out as a dividend to the
owners, how much tax would the corporate entity pay the federal government? Assume
a 20% federal income tax rate and a 15% dividend tax rate. - CORRECT ANSWER:
8,000
If a corporation had earnings of $40,000 and paid all of this out as a dividend to the
owners, how much tax would the federal government collect? Assume a 20% federal
income tax rate and a 15% dividend tax rate. - CORRECT ANSWER: 12,800
If interest rates go up - CORRECT ANSWER: asset prices go down
If you are an investor in a corporation, limited liability means - CORRECT ANSWER:
You are only liable for your investment in the company
In a corporation, the owner is also the manager. - CORRECT ANSWER: false
50 Questions and 100% Verified Correct Answers
Guaranteed A+
A company must pay out the profits that it earns to the stockholders. - CORRECT
ANSWER: False
A corporation is its own separate legal entity. - CORRECT ANSWER: true
A share of stock entitles you to: - CORRECT ANSWER: A percentage of the earnings of
the company
An ordinary dividend is - CORRECT ANSWER: A distribution of earnings to the
shareholders
Assuming a 6% discount rate which choice is better:
Choice A: Get $500 today
Choice B: Receive $600 in 2 years
Choice C: Recieve $300 today, $200 in 2 years, $60 in 3 years - CORRECT ANSWER:
B
Assuming a discount rate of 4% choice is better:
Choice A: $500 today
Choice B: $540 1 year from now. - CORRECT ANSWER: B
Assuming a discount rate of 9% choice is better:
Choice A: $500 today
Choice B: $540 1 year from now. - CORRECT ANSWER: A
, Benefits (i.e. money) that a company receives from its customers is called - CORRECT
ANSWER: Revenue
Companies raise money by issuing stocks and bonds on the - CORRECT ANSWER:
primary market
Companies that are growing quickly usually issue dividends - CORRECT ANSWER:
False
How will lowering the discount rate affect the present value of a perpetuity? - CORRECT
ANSWER: increase present value
How will lowering the discount rate affect the present value of an annuity? - CORRECT
ANSWER: increase present value
If a corporation had earnings of $40,000 and paid all of this out as a dividend to the
owners, how much tax would the corporate entity pay the federal government? Assume
a 20% federal income tax rate and a 15% dividend tax rate. - CORRECT ANSWER:
8,000
If a corporation had earnings of $40,000 and paid all of this out as a dividend to the
owners, how much tax would the federal government collect? Assume a 20% federal
income tax rate and a 15% dividend tax rate. - CORRECT ANSWER: 12,800
If interest rates go up - CORRECT ANSWER: asset prices go down
If you are an investor in a corporation, limited liability means - CORRECT ANSWER:
You are only liable for your investment in the company
In a corporation, the owner is also the manager. - CORRECT ANSWER: false
